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Judgement against Johannesburg City Council for close to one billion rand

3 August 2005

In a groundbreaking ruling today Judge Joffe of the High Court (Witwatersrand Local Division) handed down a judgement in terms of which the Johannesburg City Council has to pay two pensions funds close to one billion rand for breach of contract.

The Johannesburg Municipal Pension Fund and the City of Johannesburg Pension Fund entered into two agreements with the City of Johannesburg, commonly known as the City Council, as far back as 1990 and 1994, in terms of which the City Council undertook to pay special benefits (a 13th cheque and bonus years) to their members.

For a number of years the City Council made the required payments and in 1999 they stopped paying the 13th cheque benefit, which meant that the funds in turn stopped paying their members, made up of employees of the City Council and pensioners, who were especially hard hit by this non-payment.  Peter van Niekerk, a director at Routledge Modise Moss Morris, the attorneys for the plaintiffs, says, “The Johannesburg Municipal Pension Fund and the City of Johannesburg Pension Fund instructed us to sue the City Council for breach of its contractual obligations. The City Council’s defences were, inter alia, that no agreements had been entered into, but if they had been, they had been cancelled.”

“After a one month trial, Judge Joffe of the High Court handed down judgement today in terms of which he held that both agreements were valid and of full force and effect, and that the purported cancellation was invalid, and that they cannot be terminated on notice. The effect of the judgment is that the City Council has to pay arrear benefits estimated at about 120 to 130 Million Rand for the unpaid 13th cheque benefits of the past six years.  In total, including future payments, the judgment is estimated to be close to one Billion Rand, plus legal costs.”

“This must be one of the biggest pension fund cases this country has ever seen,” says Van Niekerk. “We at Routledge Modise Moss Morris are delighted with the judgment, in particular for the pensioners who suffered great hardship.”